Entrepreneurs Who Cut the Red Tape

WHY YOU SHOULD CARE

Because if e-firms in India can make tax filing and other duties easier for the citizens of that country, then perhaps there’s hope elsewhere.

October 24, 2014

If you are a believer that big government is bad, then the growing number of successful startups that popped up as an alternative to annoying government websites is going to tickle you. And the fact that it’s all coming out of India — perhaps the king of plodding government — may only make it better.

In recent years, outfits like MakeMyTrip, ClearTax and Yatra.com have emerged to fill all the often frustrating gaps created when the Indian government tried to create Web options for everything from rail bookings to filing income tax returns. The options are giving the country some refreshing solutions that the India government has struggled with ever since it tried to launch its own form of e-governance nearly a decade ago. And it’s given the country at least some hope that the nation of a billion can become a true global leader in tech services.

“The reason behind our success is that we provide a far superior experience than the government,” says Archit Gupta, who founded ClearTax in 2011. Gupta’s startup, an alternative (and much neater) way to file taxes online, got a grant of $120,000 from Y Combinator, an incubator based in California, a few months ago.

Government websites in India are often the butt of jokes online.

The dawn of this high-tech opportunity dates to 2006, when the United Progressive Alliance government — the coalition of center-left parties in India, which The Economist described as “the technocrats [taking] over” — put together a plan to try to up India’s leadership in e-governance. The idea was to make services like banking, insurance, income tax return filing, travel arrangements and passport applications accessible via the Internet. Dayanidhi Maran, then IT minister, said e-governance would be part of his “top 10 priority items.”

But it didn’t take long for the dream of a smooth government operation to fade. Today, the government websites in India are often the butt of jokes online — in the same category as the Obama administration’s first attempt at a health care website. In the last three years, there have been more than 2,000 instances of hacking, making people assume (falsely, one would hope) that, for instance, the password to access government servers is “admin” — because nobody bothered to change it.

Satya Nadella, chief executive officer of Microsoft Corp.

Enter the well-timed startup revolution and outfits like MakeMyTrip, one of the most successful travel portals in India, which also works as an alternative to the government rail-booking portal. It launched in India in 2005, good timing since the government had just drafted a policy that made broadband connections more accessible and had begun work on e-governance initiatives. The government’s railway booking “had just launched, and the sky had also opened up with low-cost airways,” says Rajesh Magow, co-founder and India CEO of MakeMyTrip. The company has more than 7 million monthly users, Magow says, and 60 offline stores around the country.

The government is more interested in monopolizing data than making it available.

Part of the reason behind the failure of e-governance is an outmoded law. The Information Technology Act of India didn’t mandate a switch-over to digitized products, explains Apar Gupta, advocate at the Delhi High Court. Which means, naturally, that many bureaucrats haven’t actually updated their day-to-day services. Plus, the government’s nowhere near letting open source developers do their work, explains Sunil Abraham, executive director of The Centre for Internet & Society.

Even so, the Web continues to soar in India, faster than almost anywhere else — it is, after all, the nation that birthed some of the great IT minds of today, from Satya Nadella, the CEO of Microsoft, to Nandan Nilekani, the former CEO of Infosys who famously declared “the world is flat.” Today, TheHindu reports, India boasts over 200 million Internet users and is set to have 500 million people online by 2018 — twice the number of the U.S. And the smartphone revolution — India is the fastest-growing smartphone market as of the start of 2014 — has led to many day-to-day operations becoming “app-ified.”

India is known as the nation that birthed some of the great IT minds of today. These students at a tech school in Mumbai are among the 200 million Internet users in the country.

Jumping on the Web bandwagon? Companies like Report Bee, a tool built by Ananth Mani for the public education system in the southern state of Tamil Nadu, which turns the academic performance of a whole school into an interactive dashboard of information. And RedBus, a portal for booking bus tickets, was acquired by the Ibibo Group, based in Gurgaon near New Delhi, for about $135 million, making it the biggest overseas deal in the country. Last month, Traffline, an application that provides instant traffic updates, received an undisclosed amount of funding from the India arm of Qualcomm Ventures.

The government already has “a decent infrastructure in place,” says Gupta of ClearTax. “It would be a smart move to invite intermediaries to build websites.” But here’s the rub: The government is more interested in monopolizing data than making it available, as Abraham suggested, to crucial third-party developers. Last year, the Indian Railways replaced RailRadar and Train Enquiry, tools developed by a private company called RailYatri to monitor trains on Google Maps, with its own inquiry system. Needless to say, it had its share of bugs and a distinctly poorer user experience.

Many observers are expecting a big change from the new reform-centric government under Prime Minister Narendra Modi. That’s good news for this rising batch of entrepreneurs.